TIDMBMN
RNS Number : 7418P
Bushveld Minerals Limited
21 October 2021
Market Abuse Regulation ("MAR") Disclosure
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
21 October 2021
Bushveld Minerals Limited
("Bushveld Minerals" "Bushveld" or the "Company")
Q3 and 9 months 2021 Operational Update
Bushveld Minerals Limited (AIM: BMN), the AIM quoted, integrated
primary vanadium producer and energy storage solutions provider
with ownership of high-grade assets in South Africa, is pleased to
provide an operational update for the three months and nine months
ending 30 September 2021 ("Q3 2021 and 9M 2021").
Key Highlights
Bushveld Vanadium
-- Q3 2021 Total Injury Frequency Rate ("TIFR") of 8.74, an
improvement of 46 per cent on Q3 2020 (Q3 2020: 16.10).
-- Group production in Q3 2021 of 1,056 mtV, an increase of 19
per cent on Q2 2021 (Q2 2021: 886 mtV), underpinned by continued
operational stability at Vametco.
- Focus has been on stabilising operations to achieve a
sustainable production run rate supported by the implementation of
a proactive maintenance programme, other operational improvements
and a new operating model at both plants.
- Vametco's production cash cost (C1) of US$22.4/kgV improved by
13 per cent on Q2 2021, as a result of the higher throughput in Q3
2021 and a weaker ZAR:USD exchange rate.
- Vanchem production cash cost (C1) of US$27.3/kgV improved by
three per cent on Q2 2021, in line with the weaker ZAR:USD exchange
rate.
-- Group production for 9M 2021 of 2,629 mtV, was two per cent
lower than 9M 2020 Group production of 2,680 mtV, as a result of
lower production volumes at Vametco during the H1 2021.
-- On track to meet 2021 Group production guidance of between 3,400 mtV and 3,600 mtV.
-- Unit costs for this 9M 2021 have started to normalise in line
with the lower unit costs in Q3 2021 on the back of the higher
throughput, and we expect this trend to continue in Q4 2021. We are
therefore maintaining our unit cash cost guidance for 2021 at both
plants.
-- Group sales in Q3 2021 of 826 mtV(1) in line with Q2 2021 of
820 mtV. Despite higher production volumes, sales to final
customers were impacted by challenges in international logistics
channels arising from COVID-19 , the unrest in South Africa in July
2021 as well as disruptions at local ports in July and August 2021.
We expect sales to recover as warehouse stocks in target markets
are replenished.
1: Reported as final sales to customers.
Finance update
-- Positive progress has been made in negotiations with Duferco
Participations Holding S.A ("Duferco") on the remaining balance
US$11.5 million of the convertible loan note, that would result in
US$5 million being payable in November 2021 and the remaining
US$6.5 million being converted into Bushveld shares , as announced
on 27 September 2021 . We will update the market in due course on
the final outcome.
-- Cash and cash equivalents as at 30 September 2021 of US$25
million (30 June 2021: US$31.6 million) was impacted by the lower
sales and the consequential higher working capital, as well as the
on-going capital expenditure during the quarter to support growth
and operational stability.
Vanadium market
-- After a strong start to the quarter, Ferrovanadium prices
("FeV") fell and currently trade at an average of approximately
US$31/kgV across markets. At the moment, the US market is
maintaining a premium to European prices with Chinese prices
marginally lower.
-- Demand in the US, Europe and Rest of the world remains buoyant.
-- Q3 2021 London Metal Bulletin FeV price averaged US$38.2/kgV,
6 per cent higher than Q2 2021 (US$36.0/kgV) and 58 per cent higher
than Q3 2020 (US$24.2/kgV).
-- The 2021 year to date average FeV price is approximately
US$35/kgV across all markets as at 8 October 2021.
Fortune Mojapelo, CEO of Bushveld Minerals Limited,
commented:
"I am pleased to report a solid quarter of production where we
achieved our targets of stability and cost control at both our
operations, on the back of the operational improvements we are
implementing. At the same time, we were able to improve safety
statistics, a very important achievement and one we will continue
to focus on.
"We entered Q4 2021 on a strong footing as a result and
therefore still on track to achieve our production guidance. We
continue to invest in sustaining and growth capital to maintain
stability and provide the platform for growth, to support the
volume increase in 2022."
Conference call
Bushveld Minerals Chief Executive Officer, Fortune Mojapelo,
Finance Director, Tanya Chikanza and Francois Naude, Director of
Operations; will host a conference call at 11:00 am UK time (12:00
noon SAST) today to discuss the quarterly update with analysts.
Participants may join the call by dialling:
Tel: United Kingdom: +44 (0) 330 336 9434; South Africa: +27 11 844 6054
Pin: 6605060
A replay of the conference call will be available on the
Company's website post the call.
Safety and COVID-19
-- Q3 2021 Total Injury Frequency Rate ("TIFR") of 8.74, an
improvement of 46 per cent on Q3 2020 of 16.10, as a result of
increased planned task observations by supervisors and proactively
applying lessons learned from previous incidents.
-- From 1 October 2021, South Africa's lockdown regulations were
relaxed to an adjusted level 1 as the country exited the third wave
of COVID-19 and to ensure economic recovery. Bushveld Minerals is
encouraged with the progress of the vaccination awareness at the
operations.
Bushveld Vanadium
Q3 2021 Q3 2021 9M 2021
vs vs vs
Group Unit Q3 2021 Q2 2021 9M 2021 Q2 2021 Q3 2020 9M 2020
Production mtV(1) 1,056 886 2,629 19.0% 3.6% -1.9%
-------- -------- -------- -------- --------- --------- ---------
Sales mtV(1) 826 820 2,434 0.7% 0.4% -6.0%
-------- -------- -------- -------- --------- --------- ---------
1. mtV = metric tonnes of vanadium.
Vametco
Table 1: Operational highlights for Vametco (on a 100%
basis)(1)
Q3 2021 Q3 2021 9M 2021
vs vs vs
Description Unit Q3 2021 Q2 2021 9M 2021 Q2 2021 Q3 2020 9M 2020
Ore mined Tonnes 339 556 192,868 846 997 76.1% -23.0% -11.1%
------- -------- ------- -------- -------- -------- --------
2 248
Total mined Tonnes 782 636 848,858 607 -7.8% -11.2% 36.9%
------- -------- ------- -------- -------- -------- --------
Ore grade (in % V(2)
whole rock) O(5) 0.82 0.75 0.7 9.3% 34.4% 14.8 %
------- -------- ------- -------- -------- -------- --------
Concentrate produced Tonnes 113 683 90,907 282 048 25.1% 17.0% -2.3%
------- -------- ------- -------- -------- -------- --------
Concentrate grade % V 1.07 1.07 1.06 - 3.9% 2.9%
------- -------- ------- -------- -------- -------- --------
Recovery from
Kiln to MVO(2) % 75.3 66.3 72.0 13.6% 2.3% 0.9%
------- -------- ------- -------- -------- -------- --------
Production (Nitrovan,
FeV) mtV(3) 765 593 1 753 28.9% 5.6% -10.1%
------- -------- ------- -------- -------- -------- --------
Production cash
cost (C1) (4) ZAR/KgV 327 364 355 -10.1% 7.0% 21.6%
------- -------- ------- -------- -------- -------- --------
Production cash
cost (C1) (4) US$/KgV 22.4 25.8 24.4 -13.2% 23.8% 39.4%
------- -------- ------- -------- -------- -------- --------
Foreign exchange
rate ZAR:USD 14.62 14.14 14.57 3.4% -13.6% -12.4%
------- -------- ------- -------- -------- -------- --------
1. Based on provisional, unaudited figures. Bushveld's net
attributable interest of the above figures is approximately 74 per
cent. Production cash cost is based on vanadium produced.
2. Recoveries were up by 13.6 percent in Q3 2021 relative to Q2
2021, as Q2 2021 was impacted by April slower start-up.
3. mtV = metric tonnes of vanadium.
4. Excludes depreciation, royalties and selling, general &
administrative expenses and cost associated with COVID-19.
Production cash cost is based on vanadium produced. Production cash
cost (C1) measure does not have any standardized meaning prescribed
by IFRS and differs from measures determined in accordance with
IFRS. This measure is intended to provide additional information
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS. This
measure is not necessarily indicative of net earnings or cash flow
from operating activities as determined under IFRS.
-- Q3 2021 production of 765 mtV was 29 per cent higher than Q2
2021 of 593 mtV, underpinned by continued operational stability and
improved plant performance.
- Since the successful completion of maintenance work in H1
2021, steady performance continued in Q3 2021 resulting in July,
August, and September production of 251 mtV, 260 mtV and 254 mtV
respectively.
-- 9M 2021 production of 1,753 mtV was 10 per cent lower than 9M
2020 of 1,951 mtV, due to plant instability, planned 35-day
maintenance and unprotected industrial action in the first four
months of H1 2021.
-- Q3 2021 production cash cost (C1) of US$22.4/kgV was 13 per
cent lower than Q2 2021 of US$25.8/kgV, as a result of higher
volumes in Q3 2021. The net impact of the higher volumes and
increased costs in ZAR, reduced unit cost by 10 per cent and the
slightly weaker exchange rate of USD:ZAR14.62 relative to Q2 2021
of USD:ZAR14.14 reduced unit cost by a further three per cent.
-- 9M 2021 production cash cost (C1) of US$24.4/kgV was 39 per
cent higher relative to 9M 2020 of US$17.5/kgV, due to lower
production volumes and a stronger ZAR:USD exchange rate. The net
impact of the volume decrease and increase in cost of production
was to increase unit costs by 22 per cent, while the stronger
ZAR:USD exchange rate increased unit costs by a further 17 per
cent.
-- 2021 production guidance maintained to between 2,300 mtV and
2,400 mtV, and production cash cost (C1) of between US$23.70/kgV
and US$24.20/kgV (ZAR339/kgV and ZAR345/kgV).
Vanchem
Table 2: Operational highlights for Vanchem(1)
Q3 2021 Q3 2021 9M 2021
vs vs vs
Description Unit Q3 2021 Q2 2021 9M 2021 Q2 2021 Q3 2020 9M 2020
Ore mined Tonnes 53 241 40 708 141 255 30.8% 20.0% 1.6%
------- -------- ------- -------- -------- -------- --------
Ore Grade (in Whole % V(2)
Rock) O(5) 1.45 1.36 1.39 6.6% 2.8% -2.1%
------- -------- ------- -------- -------- -------- --------
Concentrate produced Tonnes 37 511 26 300 97 160 42.6% -1.9% -19.5%
------- -------- ------- -------- -------- -------- --------
Concentrate Grade % V 0.92 0.95 0.94 -3.2% -5.2% -
------- -------- ------- -------- -------- -------- --------
Vametco concentrate
to kiln Tonnes 5 501 5 750 16 484 -4.3% 100% 100%
------- -------- ------- -------- -------- -------- --------
Recovery: Kiln to
Final Product % 75.6 89.9 81.8 -15.6% -13.4% 13.9%
------- -------- ------- -------- -------- -------- --------
Chemicals mtV(2) 92 87 179 5.0% 100% 173.5%
------- -------- ------- -------- -------- -------- --------
Flake mtV(2) 59 66 258 10.9% -66.2% -31.7%
------- -------- ------- -------- -------- -------- --------
FeV mtV(2) 140 120 305 16.6% 17.2% 6.7%
------- -------- ------- -------- -------- -------- --------
Nitrovan mtV(2) - 19 135 -100% - -
------- -------- ------- -------- -------- -------- --------
Total production mtV(2) 291 293 876 -0.3% -1.0% 20.2%
------- -------- ------- -------- -------- -------- --------
Weighted average production
cash cost (C1)(3) ZAR/kgV 399 398 419 0.3% -20.9% -11.8%
------- -------- ------- -------- -------- -------- --------
Weighted average production
cash cost (C1)(3) US$/kgV 27.3 28.1 28.7 -2.8% -8.4% 1.1%
------- -------- ------- -------- -------- -------- --------
Foreign exchange rate ZAR:USD 14.62 14.14 14.57 3.4% -13.6% -12.4%
------- -------- ------- -------- -------- -------- --------
1. Based on provisional, unaudited figures.
2. mtV = metric tonnes of vanadium.
3. Excludes depreciation , royalties and selling, general &
administrative expenses and cost associated with Covid-19.
Production cash cost is based on vanadium produced. Production cash
cost (C1) measure does not have any standardized meaning prescribed
by IFRS and differs from measures determined in accordance with
IFRS. This measure is intended to provide additional information
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS. This
measure is not necessarily indicative of net earnings or cash flow
from operating activities as determined under IFRS.
-- Q3 2021 production of 291 mtV in line with Q2 2021 of 293 mtV and Q3 2020 of 294 mtV.
-- 9M 2021 production of 876 mtV was 20 per cent higher than 9M
2020 production of 729 mtV. The lower 9M 2020 production was
impacted by the shutdown of Kiln 1 for just over a month due to
COVID-19 pandemic.
-- Q3 2021 production cash cost (C1) of US$27.3/kgV was three
per cent lower than Q2 2021 of US$28.1/kgV, as a result of the
slightly weaker exchange rate of USD:ZAR14.62 relative to Q2 2021
of USD:ZAR14.14. The Q3 2021 production cash cost (C1) in local
currency of ZAR398.8/kgV was in line with the Q2 2021 of
ZAR397.8/kgV).
-- 9M 2021 production cash cost (C1) in local currency of
ZAR418.6/kgV, was 12 per cent lower than 9M 2020 of ZAR474.5/kgV
due to the higher volumes produced. The strong ZAR:USD exchange
rate movement then reversed this improvement, and as a result, the
9M 2021 production cash cost (C1) of US$28.7/kgV was in line with
9M 2020 of US$28.4/kgV.
-- 2021 production guidance maintained to between 1,100 mtV and
1,200 mtV, and production cash cost (C1) of between US$30.3/kgV and
US$31.1/kgV (ZAR434/kgV and ZAR444/kgV) .
Growth Projects
Vametco Phase III P re-feasibility studies ("PFS")
As previously announced on 30 June 2021, the scope of work of
the PFS for Phase III at Vametco has been extended to include
upgrading the concentrate section to a Semi-Autogenous Grinding
mill and life of mine of Open Pit with higher production to supply
both Vametco and Vanchem, making Vametco the single ore supply for
both operations for the medium-term. Details on the ramp-up profile
and capital expenditure plans will be provided once the PFS has
been completed, which is still expected in Q4 2021.
Vanchem Phase II refurbishment
Vanchem's production is expected to increase from 1,100 mtV to a
run rate of 2,600 mtV by the end of 2022, supported by the
commissioning of Kiln 3 and associated downstream expansions.
Vanchem has three roasting kilns of which Kiln 3 holds similar
properties to that of Vametco's Kiln. It has a length of 90 metres
and 4.0m in diameter and covers 50 per cent of Vanchem's installed
kiln roasting capacity, with Kiln 2 and Kiln 1 at 25 per cent
respectively.
The Upper Seam Project
The Upper Seam project continues with commissioning. All
crushing units have been commissioned and are operational, with the
magnetic separator to be commissioned at the end of October 2021.
Vanchem has received the initial batches of ore from the Upper Seam
Project.
The Upper Seam Project has a reserve of 0.9 Mt of in-situ ore
and the total resource base of 16 Mt. The resource has similar
mineralogy to the current ore used at Vanchem, and tests conducted
have proven its suitability for processing. This will ensure that
Vanchem has sufficient ore feedstock in the short to medium term,
with no significant capital expenditure requirements.
Bushveld Vanadium production profile
-- Bushveld Vanadium is targeting to materially grow its
vanadium production and achieve an annualised steady state
production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a. by
the end of 2022.
- We continue to prioritise operational stability at Vametco to
achieve a sustainable and consistent output of 2,800 mtVp.a.
- Vanchem's production run rate is expected to more than double
from 1,100 mtVp.a. to a run rate of 2,600 mtVp.a. by the end of
2022, supported by the commissioning of Kiln 3 and associated
downstream expansions. Kiln-3 is expected to be commissioned in H1
2022.
S
Enquiries: info@bushveldminerals.com
+27 (0) 11 268
Bushveld Minerals Limited 6555
Fortune Mojapelo, Chief Executive
Officer
Andrew Mari, Investor Relations
Nominated Adviser +44 (0) 20 3470
SP Angel Corporate Finance LLP & Broker 0470
Richard Morrison / Charlie Bouverat
Grant Baker / Richard Parlons
+44 (0) 20 7418
Peel Hunt Limited Joint Broker 8900
Ross Allister / Alexander Allen
Tavistock Financial PR
Gareth Tredway / Tara Vivian-Neal/ +44 (0) 207 920
Adam Baynes 3150
ABOUT BUSHVELD MINERALS LIMITED
Bushveld Minerals is a low-cost, vertically integrated primary
vanadium producer. It is one of only three operating primary
vanadium producers, owning 2 of the world's 4 operating primary
vanadium processing facilities. In 2020, the Company produced more
than 3,600 mtV, representing approximately three per cent of the
global vanadium market. With a diversified vanadium product
portfolio serving the needs of the steel, energy and chemical
sectors, the Company participates in the entire vanadium value
chain through its two main pillars: Bushveld Vanadium, which mines
and processes vanadium ore; and Bushveld Energy, an energy storage
solutions provider. Bushveld Vanadium is targeting to materially
grow its vanadium production and achieve an annualised steady state
production run rate of between 5,000 mtVp.a. and 5,400 mtVp.a by
the end of 2022, from projects currently being implemented. Beyond
that, pre-feasibility studies are in progress to determine the
optimal path to increase production even further to a steady state
production run rate of between 6,400 mtVp.a. and 6,800 mtVp.a. in
the medium-term and to a steady state production run rate of 8,400
mtVp.a in the long term.
Bushveld Energy is focused on developing and promoting the role
of vanadium in the growing global energy storage market through the
advancement of vanadium-based energy storage systems, specifically
Vanadium Redox Flow Batteries ("VRFBs").
Detailed information on the Company and progress to date can be
accessed on the website www.bushveldminerals.com
About Vametco
Vametco is located near Brits on the Western Limb of the
Bushveld Complex. The integrated operation comprises a vanadium ore
mine and a processing plant that produces mostly Nitrovan, a
trademark product sold in major steel markets across the world. The
mine lies adjacent to the Brits Vanadium Project, which will in
future serve as an alternative source of near surface run of mine
("ROM") ore feed to the Vametco plant.
The Vametco mining operation uses open pit bench mining methods
to mine a well-defined orebody. The deposit is continuous with
limited faulting and dips in a northerly direction at approximately
19 degrees.
ROM ore is fed into a primary, secondary and tertiary crushing
circuit, followed by milling and magnetic separation to produce
magnetite concentrates. The magnetite concentrates are fed into the
extraction process which includes the kiln for roasting followed by
leaching and precipitation. Thereafter the precipitated vanadium as
ammonium metavanadate is converted to modified vanadium oxide
("MVO") in rotary calciners. MVO is fed into the mix plant and
finally into the shaft furnaces to produce Nitrovan.
About Vanchem
Vanchem is situated at Ferrobank Industrial Park in Emalahleni
Local Municipality, Mpumalanga Province in the Republic of South
Africa. Vanchem is a primary vanadium producing facility with a
beneficiation plant capable of producing various vanadium oxides,
ferrovanadium and vanadium chemicals. Vanchem uses the salt roast
beneficiation process, similar to the one used at Vametco. The
plant comprises: a core salt-roast processing plant, including 3
roasting kilns, an electric smelting ferrovanadium converter, an
alumino-thermic smelting facility, also located at Highveld, a
vanadium chemical plant; and a rail siding linking the plant with
Bushveld deposits and additional potential supply sources through
the national rail network.
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